16/04/2012Why YOUR Company Must Become a Tech Company - Apple, Amazon, Facebook, Instagram Lesso…3/5forbes.com/sites/adamhartung/2012/04/14/…/print/
By the middle 1900s America’s farmers were forced to create ever larger farmsto remain in business, and were constantly begging for government subsidiesto stay alive via price controls (parity programs) and land “set-asides” run by the Agriculture Department. By the 1980s family farms going broke by thethousands, agricultural land values plummeted and the ability to create value by growing or processing food was a struggle. Across the developed world, wealth shifted into the hands of industrialcompanies from landowners. To survive in agriculture required machinery more than land, as vast tracts could be farmed with few people, but requiredenormously expensive equipment. The industrial products determined value,not the land upon which they were used.
The Information Economy destroys industrial value, whilecreating value elsewhere
Sometime in the 1990s the world shifted again, and that’s what the chartabove shows us. Countries with little or no technology – no informationeconomy – cannot create value. Left with nothing but tool making, no new value is created. On the other hand, companies that can drive new levels of productivity via the creation, management, use and sale of information cancreate enormous value – like Apple.
Retailis no longer about “location, location, location” or inventory
Think about the incredible shift that has happened in retail. America’s largestand most successful retailer from the 1900 turn of the century well into the1960s was Sears. In an industry that long equated success with “location,location, location” Sears has had, and continues to control, enormousamounts of land and buildings. But the value of Sears has declined like astone pitched off a bridge, now worth only $6B (1% the Apple value) despiteall that real estate!Simultaneously, America’s largest retailer Wal-Mart has seen its value gonowhere for over a decade, despite its thousands of locations that span every state, huge quantities of inventory and super-efficient supply chain. Eventhough Wal-Mart keeps adding stores, and enlarging stores, adding more andmore land, buildings and inventory to its “asset” base the company’scustomer base, sales and value are mired, unable to rise. Yet, Amazon – which has no land, and almost no buildings – has used the last20 years to go from start up to an $86B valuation – doing much better forshareholders than its traditional, industrial thinking competitors. In the last 5 years, Amazon’s value has roughly quadrupled!Source: